2011: Back to the Future?

A robust job market for inside counsel in 2011? Absolutely, sort of.

By Mike Evers|January 13, 2011 at 12:00 AM

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Professor Richard Susskind generated controversy and book sales with his signature work titled, “The End of Lawyers?” During a recent speaking engagement, Susskind remarked that he owes much of his success to the power of punctuation. The question mark in his book’s title invites debate, even though Susskind himself seems pretty confident about his main thesis – that technology has only begun to disrupt the business of law and far more dramatic changes lie ahead.

Let’s see if this punctuation strategy can work for me, as I would love to stimulate some debate. I am frequently asked for insights on the job market for inside counsel, and in January I devote this column to making predictions about hiring. Last January, I took an even longer view and confidently wrote about what the job market will look like for inside counsel in 2020. Who do I think I am, right?

So, to test the assumptions upon which I base my 2011 predictions below, I ask you to challenge my views, and please feel free to do so anonymously if you prefer. Write to me at mike@everslegal.com or to my editor, Kayleigh Roberts, at kroberts@insidecounsel.com. The following predictions are based on my daily experiences as a recruiter, so adding your from-the-trenches feedback will go a long way to validating certain trends (or not).

Let me start by saying that I’m persuaded by all of the arguments, spearheaded by Susskind, expressing extreme bearishness when it comes to the prevailing law firm business model. I don’t care about law firms, but I lead with the previous sentence because it goes a long way to where I see the job market for inside counsel heading.The title of this column does not refer to the good old days from a law firm’s viewpoint of higher fees and demand for more hours.

In 2011, I believe we are going back to the future of robust law department hiring. Since this is such a self-serving prediction, I must offer caveats. First, this is my first bullish call on inside counsel hiring in years. Secondly, I also understand that many new positions will not be filled via traditional search firms. But, more hiring is indeed on the way in 2011! On a percentage basis, I see headcount growth in the 3 percent to 4 percent range, much higher than the zero to 2 percent range predicted by the big annual surveys, such as the widely read report put out by Hildebrandt.

I base my bullishness on macro trends and anecdotal evidence. Starting with the big picture, CFO’s and the “bean counters” continue to focus on trimming legal costs. At the same time, general counsel continue to get better at presenting the law department’s value proposition and managing to budgets. The net result is an atmosphere conducive to taking more legal work inside, at the expense of outside counsel. Yet, headcount has been static for two years, because the recession made it virtually impossible for a general counsel to lobby for new personnel.

The taboo of asking for additional headcount will go away this year. In its place will be a healthier “show me” the numbers challenge, and general counsel who present a good case will be pleasantly surprised. In fact, some GCs may be prompted by CEOs who want to lower the percent of company sales spent on legal costs. Since law departments are functioning at full capacity, new hiring becomes part of the solution.

At the more anecdotal level, from my vantage point within a boutique search firm that focuses on inside counsel placement, 2011 already looks quite promising. My firm just accepted an exclusive assignment to help a company add eight attorneys (a 30 percent increase) in three domestic locations during the first half of 2011. And a majority of our clients tell me they are likely to add staff in 2011. However, the nature of the hiring activity may disappoint you. The “bulk” order, for example, is for staff level lawyers at fairly modest salaries to handle a large volume of predictable matters that otherwise would go outside to law firms at far greater cost. The pyramid grows at the bottom, not at the top. Senior level inside counsel will be asked to do more managing of talented junior level attorneys who are now available at reasonable salaries. Companies are hiring displaced or unhappy law firm associates, not pricey ex-partners without books of business.

For more senior inside counsel, I do see a very nice silver lining and a trend that should continue for several years. An assistant general counsel who can truly manage talent will become increasingly valuable to his or her company. As law firms employ fewer associates, especially at entry level, law departments can hire without pressure to raise salaries. For any CFO who does his or her homework, it’s an ideal landscape. I hear you saying, “but we don’t train” lawyers. I stand by my 2020 prediction from last January that larger law departments will eventually start hiring newly minted attorneys in addition to the junior associates. Most business people accept that training is really just a matter of risk management. Give talented people more responsibility as they demonstrate the maturity to handle it. No one is asking you to train, but rather, to manage.

Eventually, this new crop of inside counsel will become the general counsels for start-up companies that are not even on the drawing board yet. For 2011, the picture seems clear. We will see headcount growth across industry lines, especially at companies with healthy balance sheets. The hiring will be primarily at the junior level (3 to 7 years out of law school). This will also help alleviate the top heavy nature of many legal departments, where this is little room for promotion.

Does my outlook for 2011 sound on-point with developments in your legal department? Or do you wish to call me out and tell me why I’ve got it all wrong? What is your reality heading into the New Year? If I get enough responses, I’ll report your perspectives in a future column. Let me hear from you, and thank you for reading my column.

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